North Carolina Securities Fraud Laws

Even in difficult economic times, there are always people with money willing to invest in risky ventures for the chance at plentiful returns. These same people are vulnerable to being victims of securities fraud, a crime based on false statements and misrepresentations that affect the securities market; it can occur in many ways. For example, imagine a promoter who convinces people to investor in a venture by promising them generous returns. Instead of putting the money into the investment, the promoter embezzles the money and uses funds to pay off other investors, essentially participating in a Ponzi scheme. Other prohibited activities include misleading filings and insider trading.

If you engage in securities fraud in North Carolina, you can face civil penalties in addition to being criminally charged. Depending on the circumstances, you may be prosecuted under federal law, state law, or both.

North Carolina Securities Fraud Laws at a Glance

The chart below provides a summary of statutes related to North Carolina's securities fraud laws, including links to important code sections.

Statutes

  • North Carolina General Statutes 78A-8 (Sales and purchases)
  • North Carolina General Statutes 78A-9 (Misleading filings)
  • North Carolina General Statutes 78A-12 (Manipulation of markets)

Elements of the Crime

Sales and Purchases: It is illegal for any person in connection with the offer, sale of any security to engage in the following:

  • To employ any device or scheme to defraud;
  • To make any untrue statement of a material fact or to omit a material fact in order to make the statements not misleading;
  • To engage in any act, or course of business which operates or would operate as a fraud or deceit.

Manipulation of the market (illegal to commit the following):

  • Willfully quote a fictitious price.
  • Make a transaction which involves no change in the beneficial ownership of the security in order to create a false appearance of active trading in a security or a false appearance of activity regarding the market.
  • Enter an order for the purchase of the security knowing that simultaneously an order of substantially the same size and same price for the sale of the security has been or will be entered by or for the same person for the purpose of creating a false or misleading appearance of active trading in a security.
  • Employ any deceptive or fraudulent device or scheme to manipulate the market.

Penalties

Possible penalties may include incarceration and/or fines; the actual penalties will depend on the specific circumstances of your case, but will include factors such as your criminal history.

Related Offenses

  • Embezzlement: North Carolina General Statutes 14-90
  • Identity theft: North Carolina General Statutes 14- 1113.20

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

North Carolina Securities Fraud Laws: Related Resources

Discuss Your Securities Fraud Case with a Criminal Defense Attorney

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